E-Procurement in Oil and Gas Industry

Oil & Gas industry has one of the most complex supply chain and procurement processes. They usually involve buying, receiving, and paying out goods and services to guard against critical risks that include long or delayed deliveries, damaged products, shortage of supplies, etc.

Procurement in the Oil & Gas industry depends on two types of pricing – retail pricing and wholesale or bulk pricing. The cost of an oil barrel purchased or sold is known as the retail price. It includes the dealer’s markup profit. Also, a bulk supplier who purchases large volumes of Oil & Gas should pay more than the dealer. Procurement in Oil & Gas also involves production planning, strategizing, and operational readiness related to finding Oil & Gas.

For instance, the gas industry needs to purchase equipment that will enable them to drill for and produce Oil & Gas which involves the buying of drilling equipment and other machines used in Oil & Gas exploration. The process may include logistics, processing of raw materials, inventories, planning, etc. Procurement in the Oil & Gas Industry includes purchasing petroleum products like gasoline, diesel, lubricants, oils, etc., at wholesale prices from refineries and producers, and their suppliers.

A few challenges that Oil & Gas companies face in the short-term as well long-term term-include:

  1. Transparency and Flow of Supply Chain: E-procurement in Oil & Gas industry relies on Oil & Gas production from just a handful of geographical regions. When those regions experience shortages or other economic issues that disrupt the supply chain’s flow, it trickles down and impacts the Oil & Gas supply chain and procurement process. ELIT helps by:

    • ⇾ Ensuring every step of the procurement process is visible
    • ⇾ vendor effectiveness and performance rating
    • ⇾ Provide real-time collaboration within the buyer organization and with suppliers across the entire lifecycle
  2. Huge volumes of data to Process: When looking to improve procurement and supply chain management for the Oil & Gas industry, businesses gather and process tons of data every day. The scale and strength of computer systems and software applications needed to make sense of that data determine the success and failure factors on timely inputs, decisions, and actions businesses need to control to stay relevant and on top of the competitive landscape. ELIT helps by offering a robust, scalable, and effective supply chain software management tool that:

    • ⇾ Seamlessly integrate with existing ERPs and third-party systems
    • ⇾ Ensure data creep is effectively managed and the right decisions on procurement processes can be taken by the right people at the right time with minimal effort
  3. Fluctuating Prices and Demand for Oil & Gas: Demand for Oil & Gas will always be stable or increase but the volatility and geo-political issues that influence the production and supply of Oil & Gas globally will always see unprecedented fluctuations. This requires the e-procurement in Oil & Gas industry to be more agile and dynamic. ELIT Procure-to-Pay application ensures:

    • ⇾ Quick workflows and single-page processes
    • ⇾ Ensure buyers and procurement professionals spend more time on more critical initiatives and less time on manual and repetitive activities.

One of the more efficient ways to improve the e-procurement in Oil & Gas industry is to embrace technologies and supply chain software management tools that are designed to help:

  • Streamline operations
  • Manage effectively multiple supply channels
  • Process high volumes of data to stay relevant in business and,
  • Be more efficient in sourcing and managing regular and non-regular operational and business needs in order to be scalable and agile.

E-procurement in the Oil & Gas industry has multiple challenges and unique complexities. The common thread among them is the need to contain costs, optimize efficiencies, and seamlessly integrate multiple channels of productivity.

ELIT helps address some of the unique challenges of eprocurement in the Oil & Gas industry in the following key areas:

  • Effectiveness:
    • Operational Transformation
    • Strategic Sourcing & Supplier Management
    • Category Management
    • Supplier & Procurement Analytics
  • Engagements:
    • Supply Chain Transparency
    • Supplier Collaborations
    • Logistics Management
    • Real-time communications
  • Efficiencies:
    • Spend Analytics & Cost Reduction
    • Category Utilization
    • Supplier Performances
    • KPI and Metrics Optimization

ELIT identifies three key areas where successful procurement functions strike the right balance between short-term cost reduction and long-term optimization to drive efficiency and profitability.

Supplier Collaborations & Engagements Gain better insights into supplier capabilities, cost structures, and fitment to ensure transparency and anticipate demand fulfillment
Cost Efficiency Involvement in early-stage supply planning to reduce procurement costs and drive efficient spending programs.
Business Effectiveness Make smart and justifiable purchasing decisions based on supplier performance criteria and categorization optimization without having to spend much time on the process.


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